Acxiom Shares Fall 21% on Concerns Over LiveRamp Deal

Shares of Acxiom fell 21% Thursday, one day after the data broker announced a big acquisition and issued a disappointing financial forecast.

Acxiom said Wednesday it had agreed to acquire ad-tech startup LiveRamp for $310 million in cash, part of a push by the company to tie online behavior to real world data, such as a retailer’s customer-purchase records.

Dan Salmon, an analyst at BMO Capital Markets, suggested investors didn’t like the deal because they don’t understand LiveRamp’s business, or how it could help Acxiom. “Most investors aren’t very familiar with this company and they paid a lot for it, and it was very dilutive to earnings,” said Salmon.

Salmon said the deal looks expensive. Acxiom executives told investors on a conference call Wednesday that they are expecting roughly $25 million to $30 million in revenue from LiveRamp in the fiscal year ended March 2016.

Salmon liked the acquisition and upgraded his rating on Acxiom to market perform, from sell. LiveRamp is known for technology that undergirds a large portion of web and smartphone tracking, which allows it to identify consumers who use multiple devices. While the industry is far away from the point where people see and click on personalized ads on smartphones, Acxiom is positioning itself as a hub for the most of that data.

In its forecast, Acxiom said it expects revenue in the fiscal year ended March 2015 to fall 5%, which it attributed to declines in two of its smaller businesses – hosting other companies’ computing tasks and direct-mail surveys in Europe. Before Wednesday, analysts had expected Acxiom’s revenue in that year to be roughly flat with fiscal 2014.

Acxiom also said it was boosting spending on a new offering for Internet-advertising firms, giving them access to Acxiom’s vast data on U.S. consumers. Salmon said the company is investing heavily in the new tool, but doesn’t yet have much to show for it.

Including Thursday’s sell-off, Acxiom shares are down 42% so far this year, amid investor concerns about whether the company can navigate a transition from storing data to serve direct mail and email marketing, to a player in the faster-growing digital-advertising world.